Asian markets largely experienced declines on Thursday, driven by significant sell-offs in computer chip stocks. In the United States, futures remained relatively stable after Wall Street recorded modest losses in its recent trading session.
The South Korean benchmark Kospi index suffered a notable drop of 5.1%, closing at 7,877.45, primarily due to a decline in technology shares. Notably, memory chip manufacturer SK Hynix plummeted by 7.7% and Samsung Electronics saw a decrease of 6.4%.
Similarly, Japan’s Nikkei 225 index fell by 1.5%, settling at 69,443.16, with chip equipment maker Tokyo Electron witnessing a 5.6% loss. Taiwan’s Taiex also declined by 1.1%, as shares of Taiwan Semiconductor Manufacturing Corp. (TSMC) decreased by 1.8%.
Contrasting these trends, Hong Kong’s Hang Seng index saw a modest gain of 0.8%, reaching 23,060.63. This uptick was notably influenced by a surge in shares of Chinese electric vehicle manufacturer BYD, which rose 8.7% following the announcement of a consecutive month of sales increases. Meanwhile, the Shanghai Composite index fell 0.9% to 4,075.58.
Australia’s S&P/ASX 200 index edged down by 0.1% to 8,710.30, while India’s Sensex managed a slight increase of 0.5%. The recent surge in demand for artificial intelligence (AI) has significantly boosted AI and tech stock valuations in the region, leading to substantial gains, particularly in South Korea, Japan, and Taiwan, with the Kospi and Nikkei 225 seeing increases of approximately 85% and 34%, respectively, so far this year.
However, investor sentiment has been clouded by concerns over a potential oversupply situation related to the large-scale investments by major tech companies, which have raised apprehensions about market equilibrium.
In the U.S. market, chip stocks faced considerable losses on Wednesday. Noteworthy declines included a 10.6% drop for Micron Technology, a 9% decrease for Intel, and a 6.9% fall for Advanced Micro Devices (AMD). The S&P 500 slipped 0.2% to 7,483.23, the Dow Jones Industrial Average fell slightly by less than 0.1% to 52,305.24, and the Nasdaq composite experienced a 0.7% fall, closing at 26,040.03.
Economists from Capital Economics, Megan Fisher and Vicky Redwood, expressed cautious optimism regarding the ongoing demand for AI, noting that while it may persist, growth could occur at a slower pace than previously anticipated. They emphasized that while transformative technologies might achieve widespread adoption, they may still not deliver timely financial returns to justify substantial investments.
In the commodities market, oil prices declined, falling below levels recorded prior to the onset of the Iran war in late February. Negotiations involving the U.S. and Iran, mediated by Qatar and Pakistan, raised hopes for improved crude supplies, particularly with the reopening of the Strait of Hormuz, a crucial maritime passage for global oil transport. Nonetheless, the number of vessels crossing this strait remains limited. Brent crude dropped by 1% to $70.89 per barrel while U.S. benchmark crude fell 1% to $67.91 per barrel.
The currency market also reflected movement, with the U.S. dollar trading at 162.39 Japanese yen, down from 162.58 yen. The euro was priced at $1.1387, showing a slight increase from $1.1377.
